Search age:

Search in:

Unemployment steady for another month

Jason Cadden

The jobs figures were surprisingly good for another month, raising hopes that the unemployment rate may have peaked for the year.

The unemployment rate was steady at 5.8 per cent in April, with the total number of people with jobs rising by 14,200.

The figures were better than the median forecast unemployment rate of 5.9 per cent and jobs growth of 8,000.

Treasury, the Reserve Bank and others have predicted the unemployment rate to peak above six per cent, possibly as high as 6.25 per cent.

Advertisement

It hit six per cent in January and February before easing back.

RBC Capital Markets senior economist Su-Lin Ong said employment growth seems to be picking up pace, but that could mean that interest rate hikes could be closer than first thought.

"Another firm labour market report which will only add to the debate over whether the unemployment rate has peaked for this cycle," she said.

"The latest labour force survey follows the recent, more positive shift in Reserve Bank of Australia rhetoric on this front.

"While the RBA does not release employment growth/unemployment rate forecasts, tomorrow's Statement on Monetary Policy will likely confirm that its implied higher profile for the unemployment rate over the next 12 months has been lowered."

Ms Ong said these figures alone would not change the outlook for the RBA's cash rate to a rate hike becoming more likely.

"The market is a little bit complacent about how long the cash rate will remain unchanged," she said.

"If we get continued employment generation and ongoing improvement in the leading indicators for employment, then the RBA would be unlikely to stay on hold."

HSBC chief economist Paul Bloxham said the April jobs figures aren't the only evidence that unemployment may have peaked.

"The business surveys have continued to suggest that hiring intentions have picked up and the job advertisement numbers rose for a fourth consecutive month in April," he said.

"An improvement in the labour market is consistent with our long-held view that the rebalancing of growth, from being led by mining investment to the non-mining sectors, would be a net creator of jobs.

"After all, the parts of the economy that are picking up pace the housing, consumer and services sectors are far more labour intensive than the mining sector, which is slowing down."

Mr Bloxham expects the unemployment rate to fall more rapidly in the second half of the year.

"If the unemployment rate has passed its peak, as seems likely, this suggests that the next move for the RBA is likely to be up and it is now just a question of timing," he said.